2019 Commission-Approved Changes to the Contract to Buy and Sell Residential Real Estate
Colorado real estate brokers have the unique ability to practice law. Yes, you read that right. Under some circumstances, the execution of legal documents, such as a contract to buy and sell real estate, is not just left to the lawyers in this state. In 1957, the Colorado Supreme Court held that real estate brokers are authorized to practice law under limited circumstances, which include the completion of Commission-approved forms at the request of clients in the regular course of real estate transactions. See Conway-Bogue Realty Inv. Co. v. Denver Bar Assoc., 312 P.2d 998 (Colo. 1957). Fourteen years later, the Colorado Real Estate Commission adopted Rule F, which requires real estate brokers to use Commission approved forms in most transactions; the policy behind the adoption of this rule was to ensure that real estate brokers were complying with the Conway-Bogue decision and to promote uniformity in the real estate industry. See Colorado Real Estate Manual, 2-39, available here; See Duane Duggan, New Colorado Real Estate Contracts Coming January 2019 (Nov. 26, 2018), https://athomecolorado.com/new-colorado-real-estate-contracts/. Further, pursuant to C.R.S. § 12-61-803(4), the Commission is authorized to promulgate these standard forms to be used by brokers in real estate transactions.
Since the adoption of Rule F, the Colorado approved Contract to Buy and Sell has seen many changes. One commentator has reflected on such changes, noting that in 1978, this form was only one page long. See Duane Duggan, New Colorado Real Estate Contracts Coming January 2019 (Nov. 26, 2018), https://athomecolorado.com/new-colorado-real-estate-contracts/. As we head into 2019, the contract length has now increased to 19 pages- how fitting!
The following are the most notable changes that have been made to the Colorado Contract to Buy and Sell residential real estate (see the Commission’s redlined version here). These are the first changes that have been made since 2015.
- A new Inspection Termination Deadline has been added as sub-section 10.3.2 under Inspection and Due Diligence. This section allows for a purchaser, on or before the Inspection Termination Deadline, to notify the seller in writing that the contract is terminated due to any unsatisfactory condition. Historically this was done by the fiction of objection to a condition and then rejecting the remedial offer.
- The Commission amended the Lead Based Paint Disclosure date to be a date that is agreed upon between the contracting parties in the dates and deadlines section instead of being at time of contract. The Lead-Based Paint Termination Deadline now requires the seller to deliver to the buyer a Lead-Based Paint Disclosure before said deadline. Further, the buyer has the right to conduct an inspection of the property for the presence of lead-based paint and can terminate the contract by written notice to the seller on or before the Lead-Based Paint Termination Deadline or on or before closing, if the buyer would otherwise be required to provide his written notice to terminate to seller after the closing date.
- The Owners’ Association section has been updated to bring it in accordance with current legislation and includes added documents that a seller is required to turn over to a buyer on or before the Association Deadline. The Commission also expanded the definitions of documents previously required in the Contract to Buy and Sell Real Estate.
- There is a new section for the Foreign Investment in Real Property Tax Act (FIRPTA) and Colorado withholding. The contract now assumes that the seller is not subject to FIRPTA withholding, unless the seller affirmatively checks a box indicating that he/she is a foreign person for purposes of U.S. income taxation. The seller must sign the appropriate documents to demonstrate that they are not subject to FIRPTA.
- In the personal property section, contracting parties can now check a box indicating that they have concurrently entered into a separate agreement for additional personal property to be transferred outside of the contract.
- The Loan Objection clause has been changed to Loan Review. Additional edits have been made within these provisions.
- New Survey or Improvement Location Certificates (ILC) are excluded from the Off-Record Title section.
- A seller is now required to disclose adverse material facts to the buyer in writing if he/she discovers such facts after the date of the contract. The buyer has the right to terminate at the closing date or five days after receipt of the new disclosure, whichever date is earlier.
- A Special Warranty Deed is now the default deed in the contract for conveyance of title.
Colorado Real Estate Manual, 2-39.
Conway-Bogue Realty Inv. Co. v. Denver Bar Assoc., 312 P.2d 998 (Colo. 1957).
Duane Duggan, New Colorado Real Estate Contracts Coming January 2019 (Nov. 26, 2018)
Jon Goodman, Changes to the 2019 Real Estate Commission Approved Contract- (August 14, 2018).